When Teachers Mislead: Spurious-Signal-Aware On-Policy Distillation

On-Policy distillation (OPD) transfers teacher capabilities by supervising student-sampled trajectories with dense token-level teacher signals. Recent selective OPD methods improve this process by prioritizing signals that are confident, informative, or learnable. However, the assumptions overlook a fundamental failure mode of language models: their token-level judgments can be driven by input-agnostic language priors, formatting conventions, or stereotyped reasoning templates rather than task-specific evidence. We refer to such optimization-relevant but weakly input-grounded supervision as spurious signals in OPD, which may produce large gradients while contributing little task-improving direction. To mitigate this issue, we propose SA-OPD, a Spurious-Signal-Aware On-Policy Distillation framework that identifies and filters misleading token-level supervision based on input-groundedness and optimization impact. SA-OPD introduces a lightweight input-groundedness proxy estimating whether a token-level distillation signal truly depends on the input. It then filters only tokens that simultaneously exhibit low input-groundedness and extreme distillation divergence, thereby removing high-impact spurious updates and achieving fine-grained OPD optimization. Extensive experiments on both large language model (LLM) and vision-language model (VLM) settings demonstrate that SA-OPD consistently outperforms Vanilla OPD and competitive selective methods. These results establish input-groundedness as a key dimension for OPD supervision selection and offer a simple, effective strategy for mitigating spurious updates.

STRIDE: A Tool-Assisted LLM Agent Framework for Strategic and Interactive Decision-Making

Large Language Models (LLMs) like GPT-4 have revolutionized natural language processing, showing remarkable linguistic proficiency and reasoning capabilities. However, their application in strategic multi-agent decision-making environments is hampered by significant limitations including poor mathematical reasoning, difficulty in following instructions, and a tendency to generate incorrect information. These deficiencies hinder their performance in strategic and interactive tasks that demand adherence to nuanced game rules, long-term planning, exploration in unknown environments, and anticipation of opponents' moves. To overcome these obstacles, this paper presents a novel LLM agent framework equipped with memory and specialized tools to enhance their strategic decision-making capabilities. We deploy the tools in a number of economically important environments, in particular bilateral bargaining and multi-agent and dynamic mechanism design. We employ quantitative metrics to assess the framework's performance in various strategic decision-making problems. Our findings establish that our enhanced framework significantly improves the strategic decision-making capability of LLMs. While we highlight the inherent limitations of current LLM models, we demonstrate the improvements through targeted enhancements, suggesting a promising direction for future developments in LLM applications for interactive environments.